• May 15, 2010
Nissan Leaf – Click above for high-res image gallery

A couple weeks ago, the Times of London reported that the battery in the Nissan Leaf cost the automaker around $9,000 to produce. We covered the story here, but were hesitant to agree with what seemed to be an incredibly low price. We went with the story because Nissan had told us that a profit will be made on each Leaf sold, so the low battery price partially made sense. We were still skeptical of the numbers though, apparently with good reason, because a new report pegs the battery cost at around double the previously reported amount. Mark Perry, Nissan's chief product planner for North America, tells The Wall Street Journal that the actual cost is a little less than $750 per kilowatt hour, bringing the total to just below $18,000.

One myth aside, let's move on to the "profit on each Leaf sold" statement. Again, the constant skeptic in us said that there is no way that Nissan can profit from each Leaf, at least not right away. Nissan has clarified this one, too, as the company's U.S. sales and marketing chief Brian Carolin stated, "Over the course of the vehicle life, it is profitable – in year three." So, Nissan has now confirmed what most of us had anticipated all along: batteries are expensive and profits are hard to come by. None of this really detracts from the Leaf's appeal, it simply means that Nissan won't immediately become rich off its first electric vehicle. But you knew that, right?



[Source: The Wall Street Journal]


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  • 86 Comments
      • 4 Years Ago
      Every battery cost being quoted may be correct. What "cost" are we talking about anyway ?

      - BOM
      - BOM+labor
      - BOM+labor+capital investment (finance) cost
      - BOM+labor+capital investment (finance) cost+administrative overhead ?

      Here is a report from Japan.

      http://www.bloomberg.com/apps/news?pid=20601101&sid=a_dBeZJDVg_I

      ---
      Nissan’s battery currently costs about 1.05 million yen, or $472 per kilowatt-hour, according to Takeshi Miyao, an analyst in Tokyo at auto consulting company Carnorama.
      ...
      “Our target is a lot tougher” than $370, Otsuka said in an interview yesterday at AESC’s headquarters in Zama City, west of Tokyo.
      ---

        • 4 Years Ago
        "What we get is spin, lightly laced with bits of information."

        That sounds like we have a crack-cocaine addiction. ABG gives us what we want... what we neeed. ~~~
        • 4 Years Ago
        Some of the battery-heads here are on electro-convulsive 'therapy', perhaps!
        • 4 Years Ago
        Exactly! The cost is a moving target, and those who know about individual companies aren't saying.
        What we get is spin, lightly laced with bits of information.
        • 4 Years Ago
        http://www.businessweek.com/news/201...-update1-.html

        Nissan’s Leaf Battery Maker Targets Lower Cost (Update1)
        May 14, 2010, 12:17 PM EDT

        By Makiko Kitamura and Takako Iwatani
        May 14 (Bloomberg) -- Nissan Motor Co., which will start selling its Leaf electric car this year, aims to cut the cost of the vehicle’s lithium-ion battery pack to less than $370 per kilowatt-hour to make a profit from the model.
        The target compares with the Japanese government’s industrywide estimate of about 150,000 yen ($1,600) per kilowatt-hour, said Masahiko Otsuka, president of Automotive Energy Supply Corp., a joint venture between Nissan, NEC Corp. and NEC Tokin Corp. that is making the battery for Nissan.
        “Our target is a lot tougher” than $370, Otsuka said in an interview yesterday at AESC’s headquarters in Zama City, west of Tokyo. The cost depends on factors including the scale of production as well as resale value for recycling, he said, declining to give a time frame for the target.
        The lithium-ion battery, which stores 24 kilowatt-hours of energy, is the most expensive component of the Leaf, which will sell for $32,780 in the U.S. and 3.76 million yen in Japan before government incentives for consumers. Nissan is introducing the Leaf in response to government emissions rules and potentially higher oil prices.
        Nissan’s battery currently costs about 1.05 million yen, or $472 per kilowatt-hour, according to Takeshi Miyao, an analyst in Tokyo at auto consulting company Carnorama. Other components cost about 1.4 million yen, and labor and other indirect costs must be contained to 35 percent of the sticker price to secure a profit, he said."
        • 4 Years Ago
        Nice link...

        It confirms my suspicions... nobody knows anything.

        The cost of Lithium Ion batteries from Nissan has error bars from $350/kwh to $1000/kwh. Depending on who the analyst works for.
      • 4 Years Ago
      Too much interpretation from journalists, not enough official information.
        • 4 Years Ago
        Agree! One question I would like answered is what is the Leaf's 0-60 time? One journalist says " 5. something seconds." Well on the Coda site they claim 0-60 in under 11seconds with a 100kw/ 221ft/lbs motor and 33.8 kw/hr battery. The car weights 3660lbs. Seems to me the Leaf may be somewhat slower with an 80kw motor and a 24kw/hr battery unless...unless it weights less. Of course, I know there are other factors, i.e., better power density batteries and different gearing, the controller throughput rate, etc,. But, I think some 0-60 factory technical specs might help one compare the different cars.
      • 4 Years Ago
      Until Nissan makes an OFFICIAL statement... with direct quotes... we need to put this in the speculation pile. Along with the $9,000 pack ($375/kwh) estimate.

      The London Times article did not claim to get their numbers from Nissan but they calculated by combining statements of being profitable after full production and the official sale and lease pricing of the Leaf.

      The WSJ did the same thing but a little differently.

      A reporter, whether biased or not, whether on the right or left... is trained to extract information that the interviewee does not want to give up. By structuring the questions, timing, emphasis, a good reporter can make a person give up clues.

      That is why Mr. Ramsey could not get a direct quote regarding the cost of Nissan's batteries. But he was able to ask a series of questions that made it seem to the reader that $750/kwh was the final cost.
        • 4 Years Ago
        'The London Times article did not claim to get their numbers from Nissan but they calculated by combining statements of being profitable after full production and the official sale and lease pricing of the Leaf.'

        ?? We don't know that either. The article says:
        'To address the charging problem, Palmer said Nissan is working with national and local governments — “Boris Johnson [London mayor] really gets it” — to create a charging network. Johnson has agreed to install 25,000 charge points in the capital by 2015.

        Going mass market fast is vital because electric cars cost much more than conventional ones to manufacture. The Leaf’s battery costs £6,000 to produce and the plant Nissan is building in Sunderland to make them and the new car will cost £420m. Only by shifting lots of cars quickly will Nissan recoup its investment.'

        Was this something Palmer let slip? Was it a target or other figure misunderstood? Was it something 'The Times' calculated or got from other sources?
        We just don't know.
      • 4 Years Ago
      Thanks Joe.
      The various statements from Nissan are starting to conflict.
      In the video you linked to the other day, Ghosn said that when production reached 500,000 units they would be able to do without the $7,500 subsidy.
      Assuming that they intend to sell the car at the same price as they are offering at the moment, that means around $25,000, then they expect a big reduction in battery costs.
      I suspect the 'Times' report was correct, and what they were told was the estimated cost when production reaches 500,000 units, so that after taking out a $9,000 battery the rest of the vehicle costs $16,000.
        • 4 Years Ago
        Elementary my dear Watson.

        :)
        • 4 Years Ago
        Hey Dave

        Quick question (cool if you don't know the answer, but you seem researched) - are there any issues with recycling/disposal of the lithium batteries?

        In California I read that only about 50% of the compact flourescent (twisty light bulbs) are recycled, which is horrifying considering those little buggers have mercury in them (now 50% going to land fills).

        I had not read anything on recycling/disposal/toxicity of the lithium cells, so was curious.

        If you don't know, it's cool...
      • 4 Years Ago
      At $18K, they won't be getting rich, they'll be losing their shirt on each one. After building it, shipping it and warranting at, they'll be far in the hole. If you add in R&D costs... yeow.

      If I were a competing maker, I'd sue for dumping.

      That is, if this is all true.
        • 4 Years Ago
        why not the LS2LS7? said, "letstakeawalk:R&D isn't free. Sunk or not, you spent it. So you need to raise prices to cover it. You sometimes can amortize the R&D costs across other projects though to minimize the per unit expense."

        I expect this is the way GM allocated R&D for the EV1.

        Please tell me what auto manufacturer has ever told any of its consumers how much it cost them to make a individual vehicle? Why would they? What company tells it's consumers how much money they make off of each customer? Other than income statements, balance sheets and equity reports for stock holders it is difficult to know profit margins for the whole corp let alone a individual model. Some corps you can't tell where they are at even after reading their financials such as Enron, Bear Sterns, Lehman Brothers, not to mention Madoff's interesting accounting practices.

        Sorry but your going to have to trust me and my instincts on this one and I will tell you right now Nissan's 24 kwh pack cost $13.5k. Now you can all stop guessing.

        Also the Nissan salesman said that they would only let them make 7.2% off selling Leafs. Yes, I know this info came from a salesman so all your trustdars went off.
        • 4 Years Ago
        "If you add in R&D costs... yeow."

        R&D costs are not added into the price of a product. They are expenses that the company claims; they are sunk costs.
        • 4 Years Ago
        letstakeawalk:
        R&D isn't free. Sunk or not, you spent it. So you need to raise prices to cover it. You sometimes can amortize the R&D costs across other projects though to minimize the per unit expense.
        • 4 Years Ago
        R&D are spread out to the WHOLE COMPANY. Every Nissan 370Z you buy has a bit going toward R&D. It is all one budget parameter.

        Damn you for making me defend Letstakeawalk ;<


        ----------------

        However, the battery factory, the Leaf assembly plant, and all of the machinery and test equipment.... essentially everything that becomes part of the final product... is part of the initial investment and capital cost.

        But once production is at full scale, that will begin to be paid for. And Nissan plans to be profitable at that stage.
        • 4 Years Ago
        Just two examples.
        Ford is now spending a small fortune to develop a Aluminum V8 for the Mustang GT. There's no way in [ really hot place ], they are going to make a "profit" on this V8 with the small volume GT's they sell.

        Yet, they make the Investment.
        Who pays for that investment?

        Corvette, GM has 6 different versions, that start at $48,000.
        The sell 12-26,000. It costs GM hundreds of millions of dollars to develop new Corvette models. [ Oil Subsidy? ]
        It looks like the Corvette should never be built, and yet...
        http://www.autoweek.com/article/20090506/CARNEWS/905069988
        Corvette platform may be 12 years old, before next model.

        Same with this car.
        May not require reengineering for a long time.
        Will be More profitable then a Corvette, with a larger market.

        • 4 Years Ago
        So yeah, it's just like the Prius when it came out.
      • 4 Years Ago
      They simply put out statements to try to trump the Volt. People at the lies up and touted Nissan for being so ahead of the curve.....for producing what has been produced before and right now my some an electric car just with new batteries. I still say the Volt makes much more since especially since they will be priced similarly. If it was 20K I would say cool a nice little commuter for $20K but for thirties.....not a change in hell.
        • 4 Years Ago
        The difference between the Volt and the Leaf is 5 fold. Nissan will make 5 times more Leafs than Chevy will make Volts.

        I think the Volt will sell... but it will take GM too long to get their heads out of their asses.
      • 4 Years Ago
      I don't think we will ever get a solid number from Nissan. Usually this is a trade secret (I've seen interviews with battery makers and they never give a firm price, only a vague range or an upper limit, which makes sense since it would give competitors advantage if they knew the battery price/cost). Although assuming this report is accurate, at the very least we know the upper limit is $750/kWh. The only thing we can judge externally is the price of the car and eventually we will know if it is profitable for Nissan (by seeing how they price it after the credits are over and who aggressive they try to sell the vehicle).

      A lot of people added the retail cell cost of Thundersky is $350/kWh. I can tell you the cell price of 18650 as of 2008 is ~$300/kWh (cell cost $2.5, 3.7Vx2.4ah = 8.88Wh). These should actually be used as the lower baseline for cell cost, since these types of batteries are using established chemistries and manufacturing facilities/techniques. Nissan is using new lithium manganese chemistry and new facilities, so personally I was a little skeptical of the $375/kWh price.
      • 4 Years Ago
      'Profit Seekers' - yea - that evil profit - paying wages (and better than that - taxes!), funding people's healthcare.

      I just hate profit!

      Profit - adding value to something...

      I mean Good Goddess - when the right winger's read this stuff they must just nod their heads and say, "Yep, I was right." At some point we need to accept that people think differently and be open minded, opposed to all angry and paranoid. If we are all angry, hateful, and paranoid, then how are we different from those on the right?

      (I know, and now that I have questions your dogma, you can call me names and accuse me of not being a 'true' progressive)
        • 4 Years Ago
        Your mind is closed to anything but government solutions. Just because the Republicans don't want to see a nationalized healthcare system, nationalized auto companies, nationalized banking system.

        Just because they are pro-choice on schools, pro-choice on social security, pro-choice on cars and trucks...does not mean they have no solutions - you just don't want to accept their solutions.

        Are they perfect, no. Are liberals/progressives perfect? No. But it is important to see and understand both sides. Even if you do not agree, knowing where they come from helps the argument. You probably have no clue about the progressives flirtation with Eugenics (and liberal hero supreme court justice Hugo Black upholding forced sterilization), you probably have no idea what 'war socialism' is, you forget that OSHA, Clean Water, and EPA were all signed into law by Richard Nixon, but gosh darn it, you know who Joe McCarthy is!

        You probably ignore the fact Hitler's party was called the National Socialists, and you probably have not read Saul Alinsky's 'Rules for Radicals' - or else you would see how the anger and hate have affected you.

        And no - all you railed against was 'profit seekers' - like that was a bad thing. But since you corrected yourself - I accept your correction and defacto apology.
        • 4 Years Ago
        You can make all the Profit you want.
        Just don't walk away from your cleanup costs.
        Coal: Every Lake and stream in America is Polluted with Mercury.
        Oil: BP, polluted coast line from Texas to Florida, this month, Maine in 3 more?
        Coal and Oil: Global Warming
        Wall Street: Destroyed Pension Funds by MisRepresentation.

        Republicans? Not One Word except: No.
        We see No Problems, We Have No Solutions.
      • 4 Years Ago
      This brings up another point.
      GM is getting clobbered by the Right Wing Press for a Bailout.
      But, is it actually for Innovating the VOLT?

      I'm guessing Limbaugh is also an Oil Scripted Monkey.
      And GM criticism is just Volt criticism from the Oil Lobby.

      The ONLY "INDUSTRY" the US is Number 1 at is: Propaganda.
      If you want your son ( or daughter ) to always be employed, look to "Public Relations" as a career choice.
        • 4 Years Ago
        Here's a list from a real Economist about what caused the crash, and the CRA isn't there because it wasn't a material cause:

        http://www.ritholtz.com/blog/2010/05/rewriting-the-causes-of-the-credit-crisis/

        Secondly, it's Palin and Bauchman that are itching to cut Social Security, but have made no effort to fund the War, or solve any other national problems.
        Third, in a Democracy the Majority are allowed to make laws and repeal laws.

        But, the most important fact is it's Republican Supreme Court Justices destroying the Constitution to put in place Corporate Governance of the Nation. And just like in the GS or BP example, Corporations will do ANYTHING for short term Profit, extracting wealth for resources and leaving the Tax Payer to clean up the[ hugh, expensive, planet destroying ] Externalities.
        • 4 Years Ago
        Yes, and how about explaining how you sign a contract to pay pension benefits with employee's and then Make No Commitment to Fund the Benefit.
        Suddenly, employee benefits become "unfundable".

        Aren't you glad you got rid of "Regulators".

        How about that "Over Regulated" Stock Market.
        Boy, the "right" sure was right, if the goal was to DESTROY AMERICA.

        And how about that "Constitution" thing.
        Supreme Court says Corporations can spend Any Amount of Shareholder Money on Lobbying, Campaign Contributions and SMEAR Campaigns.
        Wow! That's some "Democracy" they've just made LEGAL.

        And how about the right wing destroying Citizen rights at every chance!
        Isn't that AMAZING?
        USA USA USA, oops You DESTROYED the USA.

        How about Palen: "We're All Racists Now"!
        How about the mile deep BP oil disaster is a "Liberal" plot!
        Wow, and you expect me to vote for these unhinged "candidates"?

        How about we can't raise a War Tax, an Import Tax, or a Gas Tax,
        but we can cut Social Security!

        How about every effort to Stop Crooks from destroying the country and robbing taxpayers [ BP - Goldman ] is a Nazi Plot!


        • 4 Years Ago
        E, with all due respect,
        the CRA is another BS, Blame the Government, when it's Business FRAUD that's the cause of the Last 3 recessions. [ Shiller ]

        When are you going to finally see Your being taken for a ride by the right wing propaganda machine. Look at their track record of Catastrophic Failure.
        Shredding the Constitution along with Destroying our Economy.
        It's blatantly clear, Deregulation means: Crooks are Free to Rob us.

        Which party grows the US Economy?
        The Democratic Party.

        And I say this as a formerly proud Republican.
        I cannot vote for a track record of FRAUD, Greed and Failure.

        • 4 Years Ago
        Ladies and Gentlemen - here is your example of emotions over logic and reasoning.

        Sarah Palin really said 'We are all racists now?'

        We are not a democracy, we are a representative republic. Yes, there is a difference.

        Over regulated stock market? Look into the Community Reinvestment Act (CRA), as well as the bailouts of Goldman Sachs as far as why we are, where we are.

        You mention smear campaigns and then smear Sarah Palin? Sarah Palin has had everything thrown at her - and for what? The media demanded DNA to 'prove' whether she was the mother of one of her babies. Can you imagine if she was a liberal?

        When have we cut social security? Name a cut. Chimpy McHilter (Bush) said people should be able to put 4% of their contributions into a private account, opposed to a general fund, where the government spends every penny (none of Al Gore's 'Lock Box'). Is that your idea of a cut?

        On the flip side, you know the new Healthcare plan promises $500 billion in cuts to medicare - and these are real cuts! Obviously they are lying - the left won't cut medicare - but - they proposed it and signed it.

        Destroying citizens rights and the constitution - find social security, find medicare, find all of your programs in the constitution - it has to be interpreted. The constitution has been interpreted so much who actually knows what is in it anymore. If at any moment your side would like to read the constitution literally - I say 'bring it on.' Your entire house of cards will collapse.

        Do what your side preaches Mike - open you mind and stop the hate. Your side is against anger - and look how angry you are. Your side says there is no black and white, yet all of your arguments are black and white arguments.
        • 4 Years Ago
        That darned Right Wing Press! They should be like the left wing press that celebrated GM's bad quality, poor product planning, and other ills that lead to Dear Leader's Glorious Bailout and awarding part of GM to the United Auto Worker's Union!

        But in reality - you know who's fault this all is? It's Chimpy McHilter's (Bush)! He, trying to enrich his buddies at Haliburton (hey - did you hear - Obama awarded a $500 million no bid contract to KBR, a division of Haliburton?) and Exxon, somehow for reasons I can't explain but know are true, lead to GM's poor quality and product planning! It's true! I read it on this blog!

        Will now go re-run MSNBC and watch their 10-Part series on why Sarah Palin's shaved legs are a sign of her fascist tendencies.
      • 4 Years Ago
      This is exactly why Japan and Europe are paying higher price of 43.000 US$. We're subsidizing an American customer, which only pays 33.000 US$.

      Nissan will be selling Leafs, with loss, to American customer, but with profit with Japanese and European customer.

      I don't know, why they baby Americans so much.
        • 4 Years Ago
        http://green.autoblog.com/2010/05/10/report-nissan-leaf-to-start-at-36-000-in-uk-with-battery-inclu/

        "" Nissan is expected to officially announce the pricing and specifications for the UK-bound Leaf, but Autocar is reporting that it has been tipped by an industry source and is suggesting that the UK pricing will start right around $36,000 (U.S.) battery included. For comparison purposes, the top-of-the-line Prius available in the UK comes in around $34,000, so it's not much of an upcharge for going all-electric.

        As Autocar suggests, the price includes government incentives of $7,500 (U.S) which puts the actual before-rebate price at something closer to $43,500, quite a bit more than U.S.-bound Leafs.""

        --------------------------

        The Leaf's features puts it on par with a "well equipped" or "top of the line" Prius. Not their base model.
        • 4 Years Ago
        Joeviocoe: Prius costs 25.000 EUR here. How is 33.000 EUR, Nissan wants for Leaf, only 3.000 EUR more expensive than Prius?
        • 4 Years Ago
        Price is set by the product's nearest competitor. How much does a similarly featured Prius cost? Ah... about $3k less than the Leaf after tax credits. So Nissan set the price correctly based on being a bit cheaper after accounting for lower cost of ownership.

        Same as the U.S.

        Also, the price of gasoline is much higher in Europe... I think that has more to do with.

        Profitable or not, the price is set for a reason.

        ---------------

        And nobody has said that the U.S. version will be at a loss. It may not be AS profitable after 3 years but still.
      • 4 Years Ago
      Wait. I almost forgot to mention that I just want to drive my Leaf. I don't care if Nissan makes a zillion dollars on each one or if they're helping me out a bit on the price. As long as I can afford to pay the monthly payment (and I get to drive past all those gas stations) I'm ok with that.
        • 4 Years Ago
        I personally want them to make a nice chunk of profit on each one, because that will give them even more incentive to produce more of them, capture the economy of scale, bring the price down more and help pay for the investments to make the technology even better.
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